Method for providing insurance protection against the loss of group health insurance coverage in the event of a disability of a plan participant

Abstract

A method for providing insurance protection against the inability to pay for, and consequential loss of, group health insurance benefits if an individual employee who is an active participant in the employer's group health plan becomes disabled. The invention provides for a disability insurance policy, or alternatively a combination of a plurality of disability insurance policies, that will pay both the employer and participant's portions of health insurance premiums during the period of COBRA coverage, with the monthly benefit amount determined by determining the total premium due under COBRA guidelines for the participant's group health insurance.

Description

RELATED APPLICATIONS[0001]NoneCOPYRIGHT STATEMENT[0002]A portion of the disclosure of this patent document contains material which is subject to copyright protection. The copyright owner has no objection to the facsimile reproduction by anyone of the patent document or the patent disclosure, as it appears in the Patent and Trademark Office patent file or records, but otherwise reserves all copyright rights whatsoever.BACKGROUND OF THE INVENTION[0003]1. Field of the Invention[0004]The present invention relates to a method for providing insurance protection in group health insurance plans against loss of health insurance coverage to a participant under COBRA provisions due to a disability that prevents the participant from performing the material and substantial duties of his occupation, by providing one disability insurance contract or a plurality of separate disability insurance contracts. In a preferred embodiment, the method uses (i) a portable short term disability insurance cont...

AI Technical Summary

Benefits of technology

[0022]In addition, the disability insurance policy(s) may also have an automatic increase feature, which will also provide for increases in the amount of the monthly benefit in case of increases in the COBRA premium, thereby further enhancing the disabled participant's ability to maintain his / her COBRA coverage.

[0023]It also may have a future insurability option (FIO) to preclude the participant from having to provide medical evidence of insurability in order to increase the existing monthly benefit of the health insurance policy as prices of healthcare increase.

[0024]The invention effectively replaces premium payments for the COBRA health insurance policy that the disabled participant otherwise cannot make. The invention effectively solves the problem of disabled participants losing their COBRA health insurance coverage at a time when they need it most. The invention further solves the moral dilemma for employers who recognize that the disabled participants will not be able to maintain their health insurance coverage if they are terminated. The invention also solves the substantial cost problems and losses for hospitals whose employees become disabled but still returned to the hospital for medical treatment for which the participants are not able to afford to pay.

[0025]For many employers, firing an employee who is sick or disabled presents a significant moral dilemma. The employer knows that the sick employee will lose his health insurance coverage because, even if he has disability insurance, the employee will not be able to afford health insurance under COBRA. One of the significant advantages of this method is that it removes that moral dilemma. By using this method, the employer can be assured that the employee will retain his health insurance coverage, while the employer need no longer pay the employee's salary, which would have been a substantial cost to the employer when the employee is no longer productive.

Problems solved by technology

Disability, therefore, materially impacts a significant portion of the American populace.

A disability's financial impact can be devastating.

Moreover, the disability insurance payments frequently are taxable as income, further reducing the net amount available to the employee.

(Hereinafter an employee who is a participant in an employer-sponsored group health insurance policy shall be referred to interchangeably as an “employee” or a “participant.”) However, the terminated participant typically must pay the entire premium (monthly payment) for his coverage under the group plan, including the substantial portion previously paid by the employer; the employer no longer pays a share of the health insurance costs for the terminated participant.

Even though COBRA represents a higher cost to the terminated participant, it still may be the best or only option since he is not typically eligible for any other health insurance with pre-existing condition limitations provisions.

But the problem—and it is a huge problem—is that, as a practical matter, most disabled ex-employees / participants cannot afford to pay the premiums for COBRA health insurance, even if they are receiving benefits from disability insurance.

As a result, less than 10% of terminated disabled participants continue COBRA coverage for the entire time it is available.

This can hold great danger for the participant and his family.

If the disabled participant has further medical needs—which is quite likely for a disabled employee—and suffers further medical costs, he / she will not have a health insurance policy in place to cover those costs.

The participant and his family may have the same disastrous financial experience that this inventor had: mortgaging the equity of his house to pay the medical bills, and ultimately losing the house and car because of the inability to make the payments.

This is often difficult for the participant who has suffered a disability because the very thing that caused the disability will be objectionable to the insurance company.

Moreover, benefits under the individual policy often will be different from the group policy, and the individual policy may be more expensive.

But of course, if the participant employee has not been able to maintain the COBRA coverage health insurance, he / she cannot take advantage of this option.

Strikingly, there also are substantial losses for certain types of employers, such as hospitals, from the ex-employees inability to pay for COBRA coverage health insurance.

Hospitals frequently find that their ex-employees who are disabled return to the hospital for treatment.

Those employees usually are not able to pay their bills.

However, only six of the 400+ disabled employees kept their COBRA coverage health insurance.

Because of the recognition of the inability of most terminated employees to be able to pay for the COBRA coverage health insurance, many employers also feel a moral dilemma between retaining an employee on the employer's payroll when the employee cannot work effectively, thereby threatening the financial health of the employer, or terminating the disabled employee knowing that the employee probably will not be able to pay for continuing health insurance at a time when he / she is most likely to need it.

But the one insurance that a person cannot afford to lose, especially at a time of disability, is health insurance, and there presently does not exist any disability waiver of premium or other provision to cover inability to pay health insurance premiums because of disability.

One possible solution would be to provide group LTD, but there are some significant negatives and drawbacks with group LTD.

First, the insurance carrier can cancel the insurance contract at any time.

Second, the employer can cancel the contract at any time.

Third, such additional insurance coverage is not convertible if one leaves the group.

Furthermore, neither the carrier nor the employer can cancel the contract.

Images